French hold out against credit crunch

Unlike Britain, the US and many other countries, France appears to be weathering the credit crunch storm in reasonable shape.

The BBC's Emma Jane Kirby asks if other nations should take a leaf out of the thrifty Gallic book?

If I had to use one word to describe France's financial system, the word I would choose would be "cautious".

French banks are immensely careful about whom they lend money to and, to limit risks, they spread their investments much more widely than those in the US or UK.

Only about a quarter of banking activity is related to investment banking and dealer-broker activity - the rest is all to do with retail banking.

This meant when the credit crunch bit, the French banks were hit a lot less hard than those in many other countries.

But it is not just about banking investments - this country as a whole simply takes far fewer risks.

Take the level of household debt. In France, it is at 47% of GDP, while in the UK it is well over twice that.

Its not that temptation does not exist in France - the lure of consumerism is just as strong as it is elsewhere.

But it is very difficult to spend money you do not have in France.

French credit cards are little more than debit cards, so there is no question of simply sticking a couple of flat screen TVs on your credit card and hoping to pay for them later - if there are insufficient funds in your account, your bank will immediately block the transaction.

In the wealthy suburb of St Germain-en-Laye, just outside Paris, I met Francois Artignan, a well-to-do banker who moved back to France two years ago after a long stint of living in the UK.

Francois admits he misses the buzz of London living but says he was alarmed by the way so many British people lived on their credit cards and never saved money.

"It's true that you can note a big difference in consuming behaviours between the French and the English," Mr Artignan says.

"People here don't believe you can just put your debts together and get them refinanced... But in London... it was as if wealth was something you could get from a bank, it's a sort of miracle people seem to believe in England.

"It seems to me people there are very keen to use up all the money they have, and that's a worry when you wonder how people are going to have money for retirement for instance," Mr Artignan says.

News Source : http://news.bbc.co.uk/